Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

United Nova Technology   / Index Rebalance

<ul>
<li>There are 3 changes for the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.</li>
<li>
<a href="https://www.smartkarma.com/entities/united-nova-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:40389:1" rel="noopener">United Nova Technology (688469 CH)</a> and <a href="https://www.smartkarma.com/entities/biwin-storage-technology-co-lt" target="_blank" data-smartkarma-citation="entities:40391:1" rel="noopener">Biwin Storage Technology (688525 CH)</a> were not added at the March rebalance since they were consistently loss-making. But they have been added this time.</li>
<li>
<a href="https://www.smartkarma.com/entities/united-nova-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:40389:1" rel="noopener">United Nova Technology (688469 CH)</a> had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.</li>
</ul>


There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.

United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.

United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.


STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

<ul>
<li>There are three constituent changes for the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> at the March rebalance. One inclusion and one non-inclusion are surprises.</li>
<li>One way turnover is estimated at 2.9% and will result in a one-way trade of CNY 4,075m with over 2.5x ADV to trade on all constituent changes.</li>
<li>The adds have outperformed the deletes over the last few months with a jump in the last few trading sessions. There could be more outperformance over the next two weeks.</li>
</ul>


There are three constituent changes for the SSE STAR50 (STAR50 INDEX) at the March rebalance. One inclusion and one non-inclusion are surprises.
One way turnover is estimated at 2.9% and will result in a one-way trade of CNY 4,075m with over 2.5x ADV to trade on all constituent changes.
The adds have outperformed the deletes over the last few months with a jump in the last few trading sessions. There could be more outperformance over the next two weeks.


STAR50 Index Rebalance: Three Changes a Side; One Surprise Change

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<ul>
<li>NHSA’s new regulation on <em>establishing a mechanism for pricing newly listed chemical drugs and encouraging high-quality innovation</em> attracted widespread attention. However, it’s difficult to interpret this as an optimistic rule.</li>
<li>Although we see increasing interest in products from Chinese pharmaceutical companies, it would be difficult for Chinese biotech to be acquired on a large scale in the foreseeable future.</li>
<li>Based on 2023 results, Medicilon has entered a vicious circle. Multiple sell-offs made us question the moral standards of management. The risk is high for this type of small/lower-tier CXO.</li>
</ul>


NHSA’s new regulation on establishing a mechanism for pricing newly listed chemical drugs and encouraging high-quality innovation attracted widespread attention. However, it’s difficult to interpret this as an optimistic rule.
Although we see increasing interest in products from Chinese pharmaceutical companies, it would be difficult for Chinese biotech to be acquired on a large scale in the foreseeable future.
Based on 2023 results, Medicilon has entered a vicious circle. Multiple sell-offs made us question the moral standards of management. The risk is high for this type of small/lower-tier CXO.


China Healthcare Weekly (Feb.12) - New Pricing Mechanism for Drugs, China Biotech M&A, Medicilon

Suzhou Novosense Microelectron / Index Rebalance

Suzhou Novosense Microelectron (688052 CH)

<ul>
<li>The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.</li>
<li>We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.</li>
<li>The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.</li>
</ul>


The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.
The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.


STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact

<ul>
<li>One direct reason for the sharp drop in stock prices is that RemeGen's performance in 23Q4 would miss expectation, thus leading to disappointing performance for the entire year of 2023.</li>
<li>Due to low competitiveness of pipelines, product sales are hard to bring sufficient cashflow.Prospects for future license-out deals are still uncertain. RemeGen may find it difficult to turn the tide.</li>
<li>Reasonable market value of Remegen should be above RMB12 billion. Investors can participate in the rebounds after stock price plunge, but we do not recommend holding for the long term.</li>
</ul>


One direct reason for the sharp drop in stock prices is that RemeGen's performance in 23Q4 would miss expectation, thus leading to disappointing performance for the entire year of 2023.
Due to low competitiveness of pipelines, product sales are hard to bring sufficient cashflow.Prospects for future license-out deals are still uncertain. RemeGen may find it difficult to turn the tide.
Reasonable market value of Remegen should be above RMB12 billion. Investors can participate in the rebounds after stock price plunge, but we do not recommend holding for the long term.


Remegen (9995.HK/688331.CH) - The Real Reasons for the Stock Price Collapse and the Future Prospects

Hong Kong

Sichuan Biokin Pharmaceutical Co Ltd (SBP12 HK)

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Sichuan Biokin Pharmaceutical Co Ltd (SBP12 HK)

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

There are 3 changes for the STAR50 index and 9 for the STAR100. Some stocks will have same way flows from other index trackers. United Nova Tech is...

Brian Freitas

STAR50 Index Rebalance: Three Changes a Side; One Surprise Change

There are 3 changes for the STAR50 in March. Estimated one-way turnover is 2.9% resulting in a 1-way trade of CNY 4.08bn with over 2.5x ADV to...

Brian Freitas

China Healthcare Weekly (Feb.12) - New Pricing Mechanism for Drugs, China Biotech M&A, Medicilon

NHSA released regulations to establish new mechanism for pricing newly listed chemical drugs. It would be difficult for Chinese biotech to be...

Xinyao (Criss) Wang

STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact

There could be 3 changes for the STAR50 Index in March. One-way turnover is estimated at 2.4% leading to a one-way trade of CNY 2.9bn. The...

Brian Freitas

Remegen (9995.HK/688331.CH) - The Real Reasons for the Stock Price Collapse and the Future Prospects

RemeGen's 23Q4 results will miss expectation, leading to poor performance for 2023.The pain point isn't cashflow shortage but weak...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)